Adam Smith, the patron saint of "free trade, would never have recommended that a country succumb to external mercantilist dominance for the same reason he promoted trade to balance the internal mercantilists. The purpose of economic trade is to enhance the standard of living of a standing society, not reduce it as an altruistic exercise by those who are protected (academia).

The US needs to manage import penetration and its' balance of trade, especially when the normal equilibrating offsets are so blatantly managed.

In the near term, it is unlikely the USG can, or perhaps, should impose heavy handed restrictions. Individual consumers have to realize that every imported item purchased carries a heavy cost that is not reflected in the retail price. Walmart, the silent killer, is eating our collective lunch.

We are currently experiencing the the balloon payment part of the equation which, ironically, is decimating the export led economies as badly, or worse, than the US. Bad supply side economics does not evolve into sound economic policy, no matter how many times we try it.

Please define "industrial policy," as you are using it in this post.

I think this is a discussion well worth having, but we will never have it if we don't frame it carefully. The term "industrial policy" is itself politically charged and, therefore, subject to potentially emotional responses unless a specific meaning is provided to give it context.

FYI -- I recently had my first ever discussion of industrial policy with a former colleague who is both a conservative and an international tax specialist (he worked in the finance department), and he referred to Ireland's corporate tax policy and related economic incentives as an industrial policy, and he approved of it.

Didn't Alexander Hamilton coin the term "infant industry"?

@ Tao Jones, let me try to help you on this.

If you have no strategy, then you have a strategy - it's called "Let's do what we think best every day, without planning."

In the same way, the US has an industrial policy. It's called "let's not think that we have an industrial strategy, so that lobbyists with the most money and access to media can push for whatever legislation can best serve the people that pay them, regardless of consequences."

That is our industrial policy. This policy is the aggregate and ever changing set of trade rules, specialized tax benefits and special favors created by Congress and administrative bodies at the behest of lobbyists who generally represent wealthy individuals and large corporations. It has no direction, but over the last few decades it has tended to favor 1)undermining unions and industrial labor in general for the benefit of multinationals; 2) protecting the IP assets of multinationals; 3) creating special structures that lower the actual taxes paid by wealthy people and large corporations.

This policy is defended by classical economists because a thoughtful industrial policy would defeat their theory that it is best to have "no policy," and "let the market decide."

In a way, it makes sense. With no central plan, it really is industrial policy parted out and sold on Ebay

Another aspect of tax policy is military expenditures which heavily subsidize corporate R&D- the computer industry being an important example.

sorry - meant to write "industrial policy" not "tax policy".

One need go no further than Alfred Sloan for an extended account of the "industrial policy" behind the growth of the corporate economy. The railroad land-grants made possible a high-volume, centralized national transportation system, along with a national market; national wholesalers and retailers piggybacked on this, followed only then by large manufacturers serving the national market. And oligopoly firms depended heavily on the pooling, exchange and control of patents to stabilize markets and suppress competition (see David Noble, America by Design).

The whole 20th century model of Sloanist mass production was made possible only by the interventionist state. Otherwise, the industrial economy would have adopted electrical machinery on a localized basis resembling a hundred Emilia-Romagna regions.

Discussions of industrial policy:

At a luncheon in DC, one economist made the point that it was not really about government picking winners and losers in the global economy. You need to "pick" the losers. They come to you. So you can have a policy to deal with that, or you can ignore the problem.

That discussion was in 1986. Plenty of people have been discussing industrial policy in the United States, I would dare say explicitly. Just not the New York Times.

That discussion was in 1986.